For close to the last 8 years the State of Hawaii has brought forth bills related to vacation rental regulations. Each year a group of owners is formed to try to counter the legislation claiming that it impedes on they rights as a property owner. Amidst all the legal language within a vacation rental bill I wanted to bring forth the simple things that the State of Hawaii is trying to do and until these issues are addressed you will probably continue to see vacation rental bills. These are in no particular order, but most of the bills seem to hinge on these items.
Most vacation rental owners live a plane ride away from their Hawaii vacation rentals. These makes it highly unpractical to self-manage. While most have good intent, just having a housekeeper as an on island representative is just not practical for many reasons. The most common issues we see is that late at night the housekeepers are no available and neither are the owners thus causing lock outs and emergency issues to not get addressed. Guests then have to find another location to sleep for the night until they can get in touch with someone.
This seems to be the most debatable topic of all. Property owners that want to rent out their property state that it is their right to do with their property what they want to. On the other hand, the neighbors of that property also claim that they should have the right to not have people coming and going next door to them and living a vacation lifestyle. What the State of Hawaii is seeking to do is to have homes that fall within certain zones such as resort be allowed to rent and if you fall into a common residential zone you can not. I believe on a practical level what needs to happen is this be included in the standard purchase agreement that Realtors use. Many buyers are purchasing properties and intending to rent them out only to find out that it was not disclosed to them that they can not rent it out.
We manage properties in Waikoloa Beach Resort, which is a new resort overall, but as it ages I can say there are more and more plumbing issues arising as there at almost all older complexes. Almost every plumbing issue we have encountered with someone that does not have a true property manager does not get addressed in a timely manner. This causes more damage to their property and other properties. In condo complexes owners are required to have a HO6 policy and in most instances the amount of damage is so great that the responsibility falls outside of the homeowners insurance and onto the associations insurance.
Transient Accommodation Taxes
We have been in the vacation rental business in Hawaii for over 20 years and their tax laws relating to vacation rentals seems to change continuously. Even owning a business in Hawaii it is hard to keep up with with all the vacation rental tax legislation. We have seen the sales tax change on 3 occasions. We have seen the transient tax change on 4 occasions. We have even seen a whole new tax category added, the county transient accommodation tax. So even if owners are trying to pay their taxes correctly, keeping up with the Hawaii vacation rental tax laws can be a challenge.
On the other hand, many owners do not even intend to pay the full taxes due. If you are a legal property management company in Hawaii you are required to keep your money in a client trust account in Hawaii so the State could trace your money if they wanted to. Off island owners keep their money in a bank where they live and typically the State of Hawaii has no way to know what is going on. There have been countless times that we have heard of guests getting a rental where they do not even have to pay taxes. While possible, it is doubtful that the owners are just choosing to cover the 17%+ worth of cost.
These issues seem to be at the core of all Hawaii vacation rental legislation so until these are adequately addressed I am sure you will continue to see bills coming forth addressing vacation rentals in the State of Hawaii.